Russian trade wars to have little impact on Rock River Valley

Friday

Aug 15, 2014 at 3:00 PMAug 15, 2014 at 4:09 PM

By Alex GaryRockford Register Star

ROCKFORD — The Wall Street Journal in an Aug. 8 story reported that aerospace giants Boeing and United Technologies have quietly been stocking up on titanium in case the trade wars between Russia and Europe and the United States escalate.

In March, Russia annexed the Ukrainian region of Crimea, triggering tensions between Russia and western governments. The U.S. and Europe responded with trade sanctions. Earlier this month, Russia responded with a ban on imports of meat, fish, cheese, milk, vegetables and fruit from Australia, Canada, the European Union, the U.S. and Norway.

Those moves are likely to have little effect in the Rock River Valley. But if the trade wars worsen, limited access to titanium could hurt commerce here.

Titanium is commonly used for aircraft engines — empellers, compression disks, turbine stators and bearings — as well as in wings and internal and external doors.

“Titanium really is the only export Russia has that could affect the Rockford economy because Rockford is so heavily invested in the aerospace industry,” said John Lewis, a former Northern Illinois University economist who runs a consulting firm in Sycamore.

The United States does not have a stable supply of titanium. China is the world’s largest exporter of titanium followed by Russia and Japan, according to the U.S. Geological Survey.

The Wall Street Journal reported that Boeing and United Technologies, as well as France’s Airbus, buy the majority of their titanium components from VSMPO-Avisma Corp. Based in the western Russia city of Verkhnyaya Salda, north of Kazakhstan, VSMPO-Avisma is a leading producer of titanium and magnesium alloys and exports about 70 percent of its titanium to customers such as Airbus, Rolls-Royce, Pratt & Whitney, GE and Boeing.

Two of the Rock River Valley’s 10 top employers, UTC Aerospace Systems and Woodward Inc., manufacture components for commercial and military airplanes. More than 3,600 people work for those two firms and another several hundred work for other aerospace suppliers such as Kaney Aerospace, B/E Aerospace and GE Aviation.

Still, it doesn’t appear there is much local concern over the Russian trade issues.

“We are taking all appropriate actions to ensure we have a necessary supply of titanium forgings,” said Kate Ruppar of United Technologies. “This includes increasing inventory and exploring all available sources of supply.”

Sagar Patel, president of Woodward’s aircraft turbine systems, said Woodward doesn’t use titanium in its fuel systems, and he added that he doubts the Russian crisis would worsen to a point it affects overall aircraft production.

“The impact, if any, would be in the undetectable noise level,” Patel said. “Big companies tend to have well-planned and secured long-term supply of raw materials. The cooperation at the industry level will also prevail and as in the past, the industry will fly through such turbulence well.”